The past few months have seen several organizations, including the Consumer Electronics Association (CEA), Nielsen Media Research and Leichtman Research Group, publish research estimating the number of HD households nationwide.
The most recent estimate to be released is from Frank N. Magid Associates. Magid Associates has been studying the HD consumer marketplace for nine years, and its latest research indicates that 20 percent of households across the country have an HDTV, while 14 percent actually are viewing HD programming.
HD Technology Update caught up with Maryann Baldwin, VP of Magid Media Futures, in Los Angeles last week after her panel at the HD Technology Summit produced by Broadcast Engineering, Broadcasting & Cable and Multichannel News and asked her about the latest Magid Associates findings.
HD Technology Update: Could you lay out your findings when it comes to HD penetration of U.S. households and how many viewers with HDTVs are actually receiving HD programming?
Maryann Baldwin: At this point, we see 20 percent of households with HDTV sets, and we asked them about specific steps they’ve taken to be able to receive HDTV programming.
Of those 20 percent of households, 70 percent — or 14 percent of all households — said they’ve made some arrangement to receive HD signals. Another 6 percent have the sets but have not made those arrangements.
HD Technology Update: What are the primary reasons HDTV owners who don’t receive HD programming decide not to?
Maryann Baldwin: There are actually three groups, and none of the three dominates the other two. It’s pretty evenly split. There’s a group that simply doesn’t feel there are enough channels available in HD at this point to make the steps worthwhile, whether it’s buying new equipment, or paying yet another monthly subscription fee, or whatever they see as part of that process.
There’s another group that says it doesn’t have the financial resources to take that on right now.
Then there’s a third group that doesn’t feel television viewing is that important to go through those steps. So, they are excited to have this contemporary TV set from an aesthetic standpoint, but they don’t feel they spend enough time watching television that it’s worth going through the steps needed to get what they see as a handful of channels right now. I would say that with this group, there is a definite knowledge that there are a limited number of HD channels on most distributors’ lineups.
HD Technology Update: What do your numbers say about the size of the over-the-air audience for HDTV?
Maryann Baldwin: What they say is that it’s a very small audience right now. Just about 3 to 4 percent of HD owners say that broadcast over-the-air reception is the reception mode they’ve chosen.
I don’t think most set owners are aware of the fact that there are over-the-air signals that would provide them with free HD programming. The message has not been delivered well. I think broadcasters were out there with that message very early on and then the content didn’t follow quickly enough, and once the content started to show up, they didn’t jump back on that effort to promote free over-the-air HDTV.
I think there is a wonderful opportunity to promote that message that there is free HD available, and as a consumer, if you don’t see value in the pay television lineup right now, you could at least be receiving some signals over the air right now from the broadcast networks and getting some of that content in HD. But I just haven’t seen the industry make a concerted, consistent, easy-to-understand effort to deliver that message.
HD Technology Update: What can you tell me about the other 80 percent of the market that doesn’t own an HDTV set currently?
Maryann Baldwin: In terms of proportions of households, our research shows that 24 percent of households are planning a TV purchase in the next 12 months and are at least considering HD as the set of choice for that purchase. After that, 56 percent of TV households remain, and for a variety of reasons, they just haven’t entered into that HD universe or environment.
They don’t feel compelled to replace their TV set. They don’t spend enough time watching TV; they watch TV in ways they are very content with for the time being. We do see some of those consumers who are outside of that universe, and we do share some price point information. They are surprised to hear how much the HD set prices have come down.
That’s a hard message for the manufacturers to deliver — that they’re selling their highest end TV sets at a much lower price point.
These folks aren’t in the market for a set; they aren’t going into the stores, and they are not reading the inserts on Sundays, so they are not getting exposed to that information. That’s really the only way they could know that.
HD Technology Update: What can you tell me about the 56 percent? Is a large percentage of those viewers among the 15 percent of TV viewers commonly thought to receive analog over-the-air television?
Maryann Baldwin: They probably are over indexed in terms of that group remaining that gets television over the air, I would say.
The biggest distinguishing factor between these two markets right now — HD owners and non-HD owners — is really financial. We see a marked difference between the high-end nature of HD households and the comparatively lower household income, lower socio-economic status of non-HD owners. That’s really the key difference between the haves and the have-nots right now. Even spending $600 on a TV set is unheard of for a lot of consumers. It’s just not an amount of money they want to spend on a TV set.
But obviously, we are seeing a lot of huge pricing promotions going into the holidays for HDTVs. At some point, that will be all you can buy from the sales floor. So, if they are buying a set, they are going to leave with one one way or another.
HD Technology Update: There have been a lot of numbers published recently on the number of HD households and those receiving HD programming, including separate figures from the CEA and Nielsen. There doesn’t seem to be agreement on the number of HD households, but general agreement on the percent that actually receive HD programming. Do you have any explanation?
Maryann Baldwin: I was pleased to see ESPN release a little bit of information on their distribution that shows that 15 million households are receiving ESPN HD from their distributors. Our numbers line up spot on with that, so I was pleased to see that.
You know, I haven’t seen the other researchers’ questionnaires. I don’t know enough about their methodologies — both Nielsen and CEA — to be able to comment on potential differences in results based on how the questions were asked.
We’ve been interviewing consumers about the subject matter now for nine years and we have a high level of confidence in the way we ask the questions and the way we take consumers through the process.
I know if you were to take one HD set sale to one HD household and project those numbers out, you might come up with a 30 or 35 percent figure. We see a lot of HD households buying their second and, in some cases, their third HD set. So, a fair amount of the sales right now are going on to current HD owners. I don’t know to what degree they take that overlap into account.
HD Technology Update: What else has your research into HD households revealed?
Maryann Baldwin: One of the interesting things is that satellite seems poised to make some moves because of this 100-channel lineup of DIRECTV. I know DISH is expanding its lineup as well, so that message seems to be sinking in. On the cable side, we asked cable HD customers about their interest in HD content on demand and the response to that was extremely positive, very interested in having access to that kind of content. Comcast and Time Warner already are providing some of that content. I think that may be their opportunity to counter the growing channel lineup of satellite.
Obviously, they have some technology issues on the backend that they have to deal with. But getting into HD on demand, we know these HD households are huge users of DVRs and VOD in the cable space, so they understand how to access that content and take advantage of it. They’re smart TV viewers.
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